All right. Good morning, everyone. I'm James Burris. Welcome back. This is the first session of the day. We are required to make disclosures in public. Compensation for you to 1% or more ownership. We are prepared to repeat all disclosures for us, however, these are available in our most recent reports to this client on our firm portal. All right. With that out of the way, we are kicking off today with UHS, and we have Steve Filton, CFO. Thank you. My pleasure. Thank you. So I wanted to— a couple of questions. Starting with the fundamentals on the acute. Utilization is obviously— we've seen some of that. Still a pretty healthy utilization. What's your perspective on just from a utilization perspective and— Yeah. We've talked a lot about the idea that 2024 seemed like a transition year post-COVID into a sort of a post-COVID year. 2025 certainly feels like maybe the first full post-COVID year. It feels like our acute care metrics are mirroring the traditional metrics that we, you know, tended to experience pre-COVID. You know, mid-single digit revenue growth, call that 5%-6%-7%. Talk about, let's say, 6% at the midpoint. Split pretty evenly between price and volume. So 2.5%, 3, 3.5% adjusted admission growth, 2.5%, 3, 3.5% pricing growth. That's kind of what we've been running. It feels to us like that's a sustainable level of, you know, acute care performance. I'll say that I think we've talked about in the last few quarters, I think as have our public, acute care hospital peers, somewhat softer procedural or surgical volumes. I think that tends to be more a comparison issue than anything else in the sense that as we emerge from the pandemic, we definitely, I think as an industry, experienced this sort of collective catch-up in procedures that had been postponed and deferred during the pandemic. When we compare the first couple of quarters of this year to last year, that's a difficult comparison 'cause that's the element of catch-up. Other than just slightly softer procedural surgical volumes, I think we're at this historically sustainable level of both volume and pricing in the acute care segment. All right. I'll come back to some of those specifics, but, you know, high-level momentum you saw in the first quarter. Anything you can say about— I think that the momentum that you're alluding to is this idea that now that we've returned kind of to sort of this more normalized, revenue growth, metric or, or, trajectory, we've also been able to, I think, focus on and execute on our expense structure in a way that was more difficult during the pandemic. There were a lot of pressures during the pandemic, especially on wages and labor. So, you know, there was an extremely elevated use of temporary labor, temporary and traveling nurses and others. That's been reduced fairly dramatically. Wage inflation itself, has, I say decelerated. It really, I think I really mean accelerated at a slower rate because there just isn't quite as much competition for the, the, you know, nurses especially as there was during the pandemic. Still a pretty tight labor market. If you look at our expenses, you know, well-controlled supplies and expense has been extremely well-controlled. We really have not had any measurable impacts from, you know, the tariffs back and forth. Yeah. You know, it's been a, I think, a very favorable environment because we've got relatively steady, sustainable revenue growth, well-controlled expenses. As a consequence, you know, we've had now several years of increasing EBITDA, increasing, you know, margins, margin expansion. We continue on this track to get our acute care margins back to pre-pandemic levels. And on the, you know, kind of, you framed this 5%-7% half volume. On the volume side, if you were to further break it down in terms of medical versus surgical, you mentioned some of the comp issues on the surgical side of the business. But looking forward, you know, should those two components be, you know, fairly equally balanced? I've been surprised at the medical strength on a relative basis. You know, how should we think about those two, you know, kind of broad categories going forward? Yeah. I think, you know, again, historically, those two categories, that is medical admissions, medical activity, and surgical admissions or surgical activity, have tended to move, you know, largely in tandem. If adjusted admissions were up 3% in a quarter, generally surgical procedures would be up 2-4%. You know, something pretty tightly correlated. Yeah, I think that's the expectation once we sort of get past this comparison issue, that if adjusted admissions are growing by that two and a half, 3, 3.5% metric, surgical procedures will be growing, you know, within a point or so one way or the other of that. Okay. I wanted to touch on length of stay. It was around 4.6 days pre-COVID, went to the mid-fives during COVID. It's come down some, but it's still 6-7% above kind of that baseline. You know, this has obvious dynamics around reimbursement. You're paid per patient, but your costs are per patient day. I want to get a sense from you if there's further room to moderate length of stay or if this is more structural given the patient mix. Any perspectives on length of stay? Yeah. We think there is an opportunity to further reduce length of stay. And that's an opportunity, as I think your question suggests, to increase the efficiency, the profitability, the margins of the business because, as you suggest, most of the patients for whom we're being reimbursed are being reimbursed on a per-discharge basis. So there's a flat amount that we're being, you know, paid for their, the term of their admission. And if they are discharged earlier appropriately, you know, obviously, if, you know, the medical, you know, facts support that, then the sooner they're discharged, the more profitable, will be. And to your point, you know, obviously, length of stay rose considerably during the pandemic when we had all these acutely ill COVID patients. It has come down obviously significantly as the number of those patients has declined dramatically. It's still higher than it's been. I think the main reason for that is the continued challenges that we face on patients who are being discharged into some other milieus. Not all patients who are discharged from an acute care hospital are discharged home. Somewhere between or around a third of them are discharged into some other setting. Could be home health. It could be subacute or rehab, etc. You know, we find often that placing those patients in those types of settings can be challenging. Patients stay a day or two or three days longer just because we don't have a place that can accept them. I think that's largely because of, generally, labor shortages that were, you know, particularly exacerbated or exaggerated during the pandemic where there was such a need for acute care or nurses in an acute care setting that nurses were leaving subacute settings, whether that was, again, home health, nursing homes, in our case, behavioral hospitals, and working in acute care settings. I think that dynamic has improved, but we still find that some of these subacute facilities struggle to, you know, fill all their vacancies and that sometimes limits their ability to take patients. Yep, I think at the end of the day, there is an opportunity on length of stay, but in large part, you know, the hurdle there or the headwind, you know, is largely out of our control, I believe. I guess just sticking on this point for a minute, are there particular end markets that are most challenging or improving at differential rates between, you know, home health or rehab? Just, and I guess you mentioned it's out of your control in large part, but are there any initiatives you have or partnerships to that, that you can affect to move the needle here? Yeah. So, you know, as I think, you know, our experience has been, and I think this continues to be true about labor vacancies. They vary by geography. They do not always remain the same. The answer I think is, yeah, I mean, we will, we will find those challenges in discharging to subacute more challenging in some markets for a period of time, and then it gets better, etc. I would not call out a particular market that is a chronic issue. And you are right. I probably made too strong a statement when I said, you know, this is, you know, beyond our control. I was obviously alluding to the fact that this supply-demand issue of labor I think is kind of a macro issue. There are things that we try and do. Obviously, we try and create relationships, particularly where we have a significant amount of market share in our markets with subacute providers. In some cases, you know, we'll have arrangements where we will actually pay subacute providers to essentially reserve or set aside a certain number of beds for us, that sort of thing, you know, to make sure that there's availability for our patients. There are some things we can do. Again, I was just trying to make the point that the broad labor supply-demand dynamic is, you know, somewhat out of our control, obviously. Okay. Great. I wanted to focus on some of the new hospitals. You're in this period of decent-sized buildout across a couple of hospitals. In rough numbers, you allotted about 300 beds this year between West Henderson and DC and then another 300 beds next year with Palm Beach Gardens and the California hospital. Each of those two cohorts in isolation, you know, would add 4-5% to your bed count. How should we think about layering on admissions or adjusted admissions? You know, first they'll be total, not same facility, and then as they reach 12 months, affecting same facility. How should we think about that layering of growth? I mean, historically, you know, we generally have the view that it takes a new hospital somewhere between 18 and 24 months to ramp up to, I'll sort of call it, divisional average performance, you know, both from an admissions perspective and margin, etc. We know, those of you who follow the company, that, you know, when we open hospitals in Las Vegas, they tend to ramp up more quickly. You know, we disclosed in the first quarter that the hospital that opened in West Henderson, a suburb of Las Vegas, in its first full quarter, which was the first quarter, was already EBITDA positive, which is really unusual for a new hospital, particularly one, well, just for it, it is unusual for a new hospital. Vegas, I think, is an exception. The hospital in DC, and I think the others will ramp up a little more slowly. I think the other thing to consider is each one of the hospitals that you mentioned, Vegas, DC, Palm Beach Gardens, here in Florida, are all opening in markets where we have at least an existing, in Las Vegas, a number of existing hospitals. There is some amount of cannibalization. I think if you think about modeling, etc., you would think about trying to ramp those hospitals based on their bed size up to sort of divisional average margins, divisional average admissions, in kind of an 18- 24 month period. I would tend to do it radically. If you want to get specific and ramp the Vegas hospital up faster, you can do that. Like we've talked about this year, on a combined basis, we believe that the West Henderson and DC hospital will be together modestly EBITDA positive. Okay. I'll come back to that point in a sec. Just on this 5-7% trajectory that you've roughly framed, is the new bed growth on the acute care side supportive of that or additive to that? No. I mean, you know, when I, when I give those sort of metrics about the 5-7% growth, really they're meant to be same-store metrics. Okay, and on the EBITDA comments, bear with me a little math here. But, I think in 2024, average EBITDA per bed was like $180,000 across the network. If we applied that to West Henderson and DC, that'd be like $50 million, you know, kind of at run rate. You said you'd be, you know, modestly EBITDA positive this year. Is $50 million-ish, is that roughly the trajectory we should think about for 2026 as both these hospitals kind of reach, you know, maturity? Yeah. I mean, I like to caveat a little bit. Sometimes, you know, I prefer to have the numbers in front of me when I'm answering a question like that. But I think, you know, on the surface, that sounds about right. Yeah. You know, again, ramped up over that 18- 24 month period. Okay. Fair enough. Shifting topic, just a, a acute care pricing. Where are we in the cycle? Obviously, we went through a period of a little bit better contracting, not fully reflecting the inflationary environment, but, you know, some of it. Where are we and what's, what's sort of your visibility in terms of the outlook for the next one to two years? Yeah. I always answer this question, or I answer this question with a bit of a caveat in the sense that I think that contractual pricing, in my mind, continues to look, I'm going to call it, you know, positive or solid. I know that's a value term in and of itself. Yeah, I think, you know, we're seeing commercial contractual pricing, meaning our new contracts or annual increases in our new contracts are in that 4-5% range, which I think is, you know, generally where we would expect. What I think, you know, people don't focus on as much or maybe it's a little because it's a little more difficult to focus is, you know, I think where, where we find our revenue per unit per adjusted admission, per adjusted day, however you want to look at it, impacted more than the contractual pricing, is through what I'll broadly describe as payer behavior, you know, what payers are doing in terms of denials and non-payment and delays, etc. And, to be fair, I, you know, I don't think that behavior has changed dramatically in the last year. I think it changed some coming out of the pandemic as payers became more aggressive after having been less aggressive during the pandemic. But, you know, not so much. You know, because there's been so much happening in the managed care space, there's been a lot of speculation. I think you probably know this, Jamie, both ways, sort of, some speculation that payers would be less aggressive because of some of the focus on their behavior, etc. And some speculate that they'd be more aggressive because their profits and their MLRs were under some pressure, etc. Like I said, you know, to date, we haven't seen a great deal of change in that behavior and, you know, nothing that I would point out as affecting our, you know, growth in pricing in any sort of significant way. It is something we watch very carefully, something we're very focused on and spend, you know, a great deal of time and resources on. Okay. And just on acute care margins, you, you've talked a lot about getting back to the 16-16.5% margin for that business. Profitability really started to ramp in the first quarter of last year and very much continued into the first quarter of this year. You know, given the balance of, you know, inflation, patient mix, reimbursement, you know, some of the factors we've talked about today, DPP, what's your level of confidence in getting back to that level and any thoughts on timing? Yeah. I mean, as, again, as you point out, we've made a lot of progress in the last, let's call it a year and a half or so, and that momentum seems to be sustainable, for the reasons that I talked about, that, you know, even relatively, I'll call it modest, you know, top-line growth in that 5-7% range, is generating continued margin expansion in an environment where we're in a better position to control costs that looks like it's going to continue. You know, of all the things that you mentioned, you know, labor's, you know, better controlled. You know, we ultimately like to think that in the end, there won't be a huge impact from tariffs on our supply costs. So, you know, presuming that you mentioned DPP, we'll probably return to that when we talk about policy later. Assuming that those numbers remain relatively stable, yeah, I think, I think there's a general sense that we can get closer to, if not back to, pre-COVID margins on the acute side in the next 18- 24 months. Okay. Great. Let's move on to the behavioral business, you know, starting with volumes. You've obviously had a lot of questions on this just given the volume trajectory, which has been a little bit slower than I think you and us externally had imagined. You've been pretty kind of same level of conviction that you can get back to this 2-3% volume trajectory. What underpins that confidence? I think that our, you know, sort of confidence, as you describe it, in our ability to get back to sort of 2.5-3% volume growth, which historically has been a relatively sort of, you know, modest volume growth level in the behavioral business, is really based on kind of two broad perspectives of the market. You know, one is, I'll call it internal or micro, which is our own experience, the amount of incoming inquiries we have from patients, from referral sources, about patient need and placing patients, etc. You know, we have found in the last couple of years that we have not always been able to meet all those needs for a variety of reasons, probably most notably staffing constraints where we had available beds or available capacity but did not necessarily have the appropriate number of nurses or the appropriate number of therapists or the appropriate number of mental health technicians or aides to treat those patients and therefore had to defer, you know, certain admissions or deflect certain admissions. We believe that over time that dynamic has gotten better. If you look at last year, 2024, this dynamic, you know, patient day growth was getting better throughout the year until very late in the year. You know, that is one perspective. The other is just the outside perspective that, to the degree that there are industry-wide metrics available on diagnoses and incidents of mental illness and the need for, you know, for mental health treatment, you know, all those metrics seem to be growing and really across the board, meaning, you know, across diagnoses, across ages, across payers. The general sense that we have is the onus is on us to solve the issues that have been preventing us from taking all those patients, mostly labor scarcity, sometimes, you know, the physical availability of beds, sometimes the acute, you know, the acuity of the patients that are being asked to be treated. All those things are things that we should be able to deal with over time. You know, I think you said I was very emphatic about being able to get to the 2.5-3% growth, patient day growth this year, maybe too emphatic. What I did also add, however, was, if we didn't get to that volume growth, I thought we'd still get to our targeted revenue growth in, again, the mid-single digits, by virtue of the strong pricing that we've continued to experience. You, you've made some comments recently just about the strong pricing in the market and that attracting more competition. How does that factor into the, you know, your ability to get back to that, that trajectory? Yeah. And that's a part of it. I mean, the reality is because I think there is a healthy demand environment in behavioral, because I think there is a healthy pricing environment both in terms of contractual pricing with payers and some of the more recent Medicaid supplemental programs that some states have implemented. We've seen an increase in competition, and new entrants into the market. Particularly, I think, you know, we've made the point, I think, in our last couple of earnings calls on the outpatient side of the business. We historically have had, I think, a fairly significant skew and focus on inpatient care. I don't, you know, to be perfectly candid, I don't know that we've got, I'll call it fair share, again, a sort of a value judgment word, but our fair share of that incremental outpatient business, of which I think there's a significant amount. I think we're correcting that, both in terms of tightening up our own policies and procedures to make sure that the patients that are in our facilities and are being discharged into outpatient programs are being discharged into our own outpatient programs where clinically appropriate. Also, though, capturing the, what we call the step-in outpatient business in this industry. These are patients who are entering the behavioral system, not on the inpatient side of things, but on the outpatient side. They may never need inpatient care, although some of them probably will. That, which is really more of a freestanding facility, freestanding outpatient facility business, is a business that we have not played in in a very significant way historically. I think are increasing our footprint there pretty rapidly. You mentioned labor being one of the bottlenecks in this. If I look back the last two years, salary, wage, and benefits in the behavioral business are up like 14%, versus admissions down 4%. I realize that's like picking a very specific time period and you don't have numbers in front of you, but just roughly speaking, how much of that is added, you know, unit cost per nurse or whatever, versus increased headcount that can allow you to absorb more capacity? Yeah. I think it, I think it's a combination, you know, obviously, and I alluded to this a little earlier, you know, one of the dynamics that I think almost all subacute providers experienced during the pandemic, behavioral, home health, skilled nursing, nursing homes, you, you know, experience was they were losing nurses in particular, but potentially other clinicians and employees to the acute care setting where they were able to make significant premiums on their pay. I think that nurses in the acute care setting have always historically made more than nurses in a subacute setting. That difference, and that gap widened considerably during the pandemic. I think what you saw coming out of the pandemic is that subacute providers writ large, including us as behavioral providers, were readjusting, you know, our salary structures to be more competitive in that regard. I think that's a piece of what you're seeing, and then some of it is also, as you point out, you know, we're staffing up, and that takes some time. For a period of time, you know, what we're, what you're going to see, I think reflected in our financial statements is a lot of cost of new hires, which, you know, essentially is nonproductive costs. You know, you were talking about salaries and then, you know, admissions or revenue. In the beginning, when we hire new nurses and new techs, etc., there's a period of time depending on their experience in particular where we're training them and orienting them. Again, in some cases, if they're newly, new graduates or really have no experience in the behavioral industry, you know, we could be training them for months at a time. And so, you know, you make this investment in salaries and wages that then is not being reflected in, you know, revenues and profits for a period of time. Ultimately, we think it's the right investment, particularly if we can control our turnover rates and reduce turnover. That's another way of sort of increasing the effectiveness of that investment. Yeah, I think, you know, that's also some of what, you know, you're seeing in the data that you're citing to me. I think that dynamic tied to this next question as well, but you, you've added 140 beds in the behavioral business in 2024. You go back a few years, that was like 300, 400. You know, I guess what do you need to see in the labor markets and otherwise to get back to a more aggressive cadence of new bed growth in behavioral? Yeah. So it's a, it's an absolutely valid observation that we slowed our bed additions again during the pandemic, the argument being if we couldn't staff the beds that we already had, what was the point of building new beds? And to your point, I think now that we've emerged from the worst of those labor shortages, and this really is a market by market determination, but we've resumed a lot of that bed addition, bed building that had been paused during the pandemic. Now, again, there's timeframes associated with that, you know, permitting, the actual construction time, you know, ramping up, getting, you know, those new beds staffed, etc. It takes some time. But to your point, I think, you know, over the next several years, you'll see the number of bed additions and new hospitals. We also have some new hospitals coming on. We just opened a new hospital in Michigan, and have a few more on the board over the next few years. You'll see both bed additions to existing hospitals and De novo facilities, more of those coming on in the next few years. Okay. And then pricing's obviously been very strong in this business. I think three of the last four years was 6% or better, and more of the mix of that five to seven algorithm in this business has been pricing. You know, is there a point we reach a new equilibrium? You know, how sustainable is this kind of trajectory in the near and, you know, as you think about the next couple of years, again, do we reach a new equilibrium that's a little lower than you've been seeing lately? We've argued, I think for the last several years that, you know, there is this sort of interplay between pricing and volumes. To some degree, the reason that we've been able to achieve, I'll call it outsized or certainly larger than historical pricing levels is the very lack of capacity that I've been talking about on the volume side of things, you know. That's been a headwind for us on the volume side. The flip side is as payers struggle to sometimes and in some markets find adequate access and capacity for their subscribers and their patients to pay a higher rate to be in network and essentially to be assured, you know, access to facilities in the market and to beds in the market and outpatient capacity, whatever it may be. Yeah, we, you know, again, I think, you know, what we've seen over the last several years is this lower than historical volume growth and higher than historical pricing. I think what we've argued is that, using your term, there would be over the next few years more of an equilibrium, that pricing would start to moderate as volumes came up. The truth of the matter is, as I think, you know, in an earlier sort of question or commentary, it's been a slower process than we originally imagined. Volumes have been slower to recover back to historical levels than we might've imagined and expected and I think even guided to. At the same time, I think pricing has remained stronger. I, and again, our long-term view, or I'll call it intermediate and long-term view is that pricing will moderate some, volumes will come up. I think at the end of the day, in combination, we're still going to be, you know, tracking that sort of mid-single digit same-store revenue growth that I talked about earlier in that kind of 6%-7%-8% range. Is there a way to sort of measure that on a micro basis just in terms of number of payers you're able to give in-network contracts to and kind of guarantee that supply and the number who are on the outside that would like more supply and just, you know, better gauge where we are from a supply-demand balance perspective? Yeah. I mean, the answer of course is yes. I mean, we could say, you know, these are the number of contracts. I don't know this off the top of my head, by the way, but these are the number of contracts that we've renegotiated in the last several years at a, you know, 4-5% annual increase greater than we might normally have, etc. and then, you know, I think sort of the question I get asked, which I think is kind of where you're going with your question is, you know, how much more runway is there? You know, what inning in this game are we in? That's hard to say, you know, as I said, I mean, I think the reason the pricing has been more sustainable and has endured more is because, you know, the volumes have been challenging, not just for us, I think, but for the industry in general and capacity is somewhat limited, etc. I think it's a little bit hard to say, you know, again, you know, how far along in this process we are. Again, I, you know, I'm going to say our intermediate long-term view is that the equilibrium that you kind of talked about in your question is something that will occur over the next several years. Maybe just closing out behavioral, even though margins have been in kind of the upper end of their historical range the last couple of years, you know, putting these factors together that we've discussed today, I mean, how are you thinking about where margins go from here? Is the 2022-2023 type of level sustainable? Do you expect margin improvement and any color there? Yeah. I mean, I think that the historical model for the behavioral business, and by the way, I think it's very similar to the acute business as we talked about, is if you can achieve that mid to upper single digit revenue growth in behavioral, we've been talking 6%- 7%- 8%, let's call it 7% at the midpoint, which would be, you know, 4%, 4.5% price to 2.5%, you know, patient day growth or just the patient day growth, then it's unlikely that your expenses will be growing faster than that. For the vast sort of history of the business, they have not. Now, again, the pandemic was an exception when all of a sudden salaries were growing, you know, much faster, and, you know, we were having to pay for temporary traveling nurses and sign-on bonuses and all sorts of recruitment incentives, etc. All those things have largely either completely disappeared or moderated significantly. You know, the notion is, yeah, as long as we can grow the revenue side of the business in that 6%-7%-8% range, that yes, there's still room for margin expansion. Now, to be fair, some of that margin expansion over the last several years, particularly in behavioral, has come from these Medicaid supplemental payments. We may touch on that in the last minute or so. Those programs likely not to continue to grow in the future. As an industry, I think the hope is that they'll be at least sustained at something close to current levels. That plays a part in this as well. Okay. I'm glad we were able to focus on fundamentals today, but in the last minute or so, any updates on DPP? I think your latest is the existing programs would be protected. You're waiting on some approvals in Tennessee and DC. Just any updates there? Not really. I mean, obviously the reconciliation bill is now with the Senate. I think there's a lot of lobbying being collectively done by the care or hospital industry in general, the behavioral industry, the acute industry in terms of sort of firming up the language, and trying to ensure that existing programs and programs that have been submitted and awaiting approval are included in the grandfathering provisions, that the grandfathering provisions, which say, you know, they're basically, they're grandfathering existing terms are very specific to what those terms are, the tax rates, average commercial rates, all those sort of things. As you know, there's a lot of sort of back and forth with the Senate. They may not have the exact same goals as the House. We're not sure, you know, how that will play out, but I think the industry is hopeful, you know, that the terms and the language in the House bill, at a minimum, are sort of the floor of, you know, what would be included in either a Senate bill or a reconciled bill ultimately. Okay. We have one last one in here. You previously gave a $50 million-$100 million number for enhanced ACA subsidies if, if that went away for, for next year, given some of the, you know, moving parts there. Is that still the right way to think about it? Yeah. I would say we were at the lower end, lower end range of that. To be fair, that was a guesstimate because there are a lot of sort of assumptions and variables that go into that. Yeah, we were in that sort of $45 million-$50 million estimate range. Okay. Great. Thanks, Steve. Thank you. We'll end there.